I know, I know ... it's been a while since our last post and for that I can not apologize enough. Many of you have a craving for the basic investment advice that we post here on DIGestingINvesting, and many of you have a craving for the incredibly easy and healthy recipes that we strive to provide. And when I leave a big gaping three month interval between these posts, I understand that some of you begin to develop that empty feeling. Well, we'll try real hard not leave you hanging again as we ramp up into a regular routine again.
Our last post provided a recipe for 'Great Greek Potatoes'. Given the financial chaos that Greece has been enduring recently, I have to wonder if this recipe hasn't given a case of indigestion in recent months.
The RULE OF 72
Though I have referred to this commonly used 'rule of thumb' in one or two previous posts, I can not state enough the importance of understanding why this is so important to us. As a seasoned advisor I often refer to the RULE OF 72 to quickly determine a mental calculation.
As we all know the investment world is kinda like the legal world. The common use of acronyms and cinnamons ... err, synonyms, creating a language filled with jargon that makes our heads spin. ETFs, MERs, ROIs, ROEs, RORs, RRRs, SOLs and a thousand more are followed by GDPs, Yields, Coupon Rates, Overnight Rates, Peg Rates, Book Values and a thousand more of these. In fact, over the years I have concluded that the investment business prefers that the investing public just not understand what the heck their talking about. So, we can be value investors or growth investors, bears or bulls, quantatative, fundamental or technical, but at the end of the day, we just want a vague idea of what's going on.
Formulas, formulas, formulas! So confusing. This is why, I LOVE THE RULE OF 72.
In the finance world, the Rule of 72 is an easy method of quickly determining the time required to double the value of your investment. Although spreadsheet programs and calculators have functions to determine the accurate time elapsed to double your money, this simple 'rule of thumb' can prove useful for swift mental calculations.
Here's an example. You go to the bank and see a great big poster advertising a Guaranteed Interest Certificate which gives you a guaranteed rate of 3%. You think to yourself, "self, if I deposit my cash into one of these I can double my money in ... twenty four years! (72/3%)
EASY!
Want to retire in 18 years? Need to have $800,000. to supplement your company and gov't pensions at retirement?
Let's assume you currently have $250,000 in savings and the best return you can get is 4%. Using the Rule of 72 you can quickly figure that you will have $500,000. in 18 years. (72 / 4 = 18)
So you will have a $300,000 shortfall. Now, you can develop a savings strategy to create an additional $300,000 over the next 18 years.
By engaging in a regular savings plan you can factor in the required amount ($300,000), the amount of time (18 years) and the projected return on capital (4%) and determine how much money is required to deposit through regular intervals. In this case you would deposit $1,000 per month ($12,000/yr) for the next 18 years (@ 4%) to have saved that $800,000.
There are many online calculators available to assist you with the answers. The one I used to arrive at the conclusions here was http://www.mackenziefinancial.com/ .
Now, how about that sumptuous Steak with Red Onion Marmalade, groovy Grilled Asparagus and marvelous Mom's Maple Salad Dressing for the upcoming long weekend?
STEAK with RED ONION MARMALADE
Here's what you will need:
- 4 thick rib eyes or strip loin steaks
- freshly ground black pepper
Onion Marmalade
- 2 red onions thinly sliced
- 2 tablespoons of butter
- 2 tablespoons of brown sugar
- 1 tablespoon of balsamic vinegar
Trim excessive fat from the steaks, then sprinkle them with generous amounts of fresh ground pepper. Cover and set aside on the counter for an hour or so as these steaks should be at or about room temperature when they hit the grill.
Heat the butter in a saucepan on low and add the onions, stirring occassionally until the onions are soft. Add the brown sugar and vinegar, leave of low heat, keep up with that occassional stir for about 30 minutes. You'll know when this is done.
Place the steaks on a pre-heated lightly oiled grill. I like to crank it on 'HIGH', get it good and hot, and then turn down to 'LOW' as I'm putting on the steaks. CLOSE THE LID. Rare steaks take about 3 minutes per side (ONLY TURN ONCE) and Medium steaks take about 4 minutes per side.
Take 'em off the grill, put on a warm plate and cover tightly with tin foil immediately. Let these 'rest' for a couple of minutes while you're grilling the asparagus.
GRILLED ASPARAGUS
- 1 hefty bunch of asparagus (1 lb/.5 kg)
- (fresh) Parmesan
- 2 crushed garlic cloves
- 2 tablespoons of olive oil
- 2 tablespoons of balsamic vinegar
Break off the woody ends of the asparagus. (hold each end and bend until they snap) Then brush with a bit of olive oil, drop them on the grill for about 3 minutes until they are bright green. Mix together the oil, garlic and vinegar and pour the dressing over the warm asparagus ... then sprinkle with freshly shaved Parmesan and fresh ground pepper. These only take a few minutes and will be complete by the time time your steaks have 'rested'.
If you decide to have a fresh green salad with your steak and asparagus, here is an incredibly easy and refreshing dressing that your have to try. (Until today this was my Mom's secret recipe)
Mom's Maple Dressing
Mix 1/3 olive oil with 1/3 balsamic vinegar and finish with 1/3 maple syrup. Whisk it together and add to any salad for something different and delightfully tasteful.
That's it for now! Have a great long weekend, drive safely if you're heading out of town and don't forget to check your propane tank before firing up that bbq. Nothing worse then running out of fuel as you're getting started. I speak from my own experience.
DIG IN!
Jeff & Beverley
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